Union Budget 2015-16: MUDRA bank to be set up for small, micro enterprises

Finance minister Arun Jaitely, presenting the union budget 2015-16, today said that the government firmly believed that development had to generate inclusive growth.

While large corporate and business entities had a role to play, employment generation had to be complemented by informal sector enterprises which generate maximum employment, he added.

There were some 5.77 crore small business units, mostly individual proprietorships, which ran small manufacturing, trading or service businesses, 62 per cent of which were owned by SC / ST and OBCs.

Jaitley emphaied that these bottom-of-the-pyramid, hard-working entrepreneurs found it difficult, if not impossible, to access formal systems of credit.

Jaitley therefore, proposed creation of a Micro Units Development Refinance Agency (MUDRA) Bank, with a corpus of Rs20,000 crore, and credit guarantee corpus of Rs3,000 crore.

MUDRA Bank would refinance micro-finance institutions through the Pradhan Mantri Mudra Yojana.

In lending, priority will be given to SC / ST enterprises, he said. These measures will greatly increase the confidence of young, educated or skilled workers who would now be able to aspire to become first generation entrepreneurs; existing small businesses, too, would be able to expand their activities.

Jaitley further said that just as the government was banking the un-banked, it was also funding the un-funded.